Jeffrey D. Sadow is an associate professor of political science at Louisiana State University Shreveport. If you're an elected official, political operative or anyone else upset at his views, don't go bothering LSUS or LSU System officials about that because these are his own views solely.
This publishes Sunday through Thursday with the exception of 7 holidays. Also check out his Louisiana Legislature Log especially during legislative sessions (in "Louisiana Politics Blog Roll" below).

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27.4.15

Grand LA budget bargain seems increasingly elusive

As the regular session of the
Louisiana Legislature continues, it seems more and more likely that worlds will
collide concerning resolution of the fiscal year 2016 budget.

Last
week, the Senate Finance Committee passed SB 177 by
Sen. Robert Adley, which would put
forth a constitutional amendment that would eliminate the state’s inventory tax
credit by eliminating inventory’s taxation, as a result raising over $500
million that could go to reducing a shortfall in the $1.6 billion range. The
problem is that this would cost local governments almost 80 percent of that and
business the remainder, although Adley assured local governments that some way would
be concocted to allow them to recapture that revenue but provided no details.

Gov. Bobby
Jindal supports eliminating the credit that is refundable, but not the
portion that is used to offset corporate income and franchise taxes. However,
as it is a constitutional amendment, he has no direct impact on the bill’s
passage, which requires a two-thirds vote in each chamber. He has promised
retaliation on a strategy of suspending tax exemptions, which the Legislature
can do by resolutions that he can’t veto by a two-thirds vote, by vetoing a
budget that relies on them, but they can override that by a two-thirds vote.

Meanwhile, today the House Ways and
Means Committee considered several items that together also could have raised
in the area of $500 million, which includes getting rid of other refundable tax
credits, raising the cigarette tax, adjustments to deductions for income taxes,
and hastening the end of the solar credit. Half would have come from the cigarette
tax, HB 119
by state Rep. Harold
Ritchie, which Jindal has said he would not support unless it became a
vehicle for funding a tax credit for families paying higher education expenses,
but that got amended down almost $200 million in committee, even as another
amendment steered that money, quite properly, to fund Medicaid (as
smoking-related conditions cost the state’s Medicaid program over
$800 million annually) that could leverage more federal money for Medicaid.
Other measures are scheduled this week, including one that would trigger a big
reduction to the Motion Picture Investor Tax Credit, for which Jindal has yet
to express support, that could close the gap more.

SB 177 at this point presents way
too many uncertainties. It seems unlikely that it can get the two-thirds votes
needed to pass to voters unless local governments get back revenues that they
would lose under the bill and even if it could the public well could vote it
down if local governments cry that property owners will get hit with huge tax
increases within two months should it pass. Yet conjuring a way to allow local
governments to keep these revenues without tax increases seems like pulling a
rabbit from a hat at this point.

And while Jindal favors some
measures that appeared in front of the House panel, the cigarette tax increase
proceeds flowing straight into a form that does not produce a revenue-neutral
outcome seems primed for a veto from him. In other words, for these measures to
combine and wipe out much of the shortfall, all of the governor, local
government, business, and taxpayer advocates must get on the same page for the
package to succeed. Given their differing and in crucial ways contradictory
attitudes, that does not seem likely.

Which means at least one of these entities
will end up with the short end of the stick where raw political power must
overcome them. Making the matter more interesting, the various centers of power
may have enough of that to veto actions by the other. If that is the actual
picture, then stalemate occurs and nothing gets done, until pressure builds
that shifts power away from some and towards others of these centers that then
enables them to impose their wills on the recalcitrant ones.

Policy-makers need to understand
that in this environment that a grand bargain cannot occur that makes everybody
reasonably happy; somebody’s going to get the shaft and feel none too pleased
about it. Who that might be remains to be seen, but it will be somebody or some
interest.

1 comment:

Anonymous
said...

You have to at least acknowledge the insanity in Republican demands to plug a $1.6 billion budget deficit by remaining "revenue neutral." Jindal is telling the legislature to irrigate the land by continuing a drought.

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